Rising gold prices deter buyers in Asian markets

Soaring gold prices reduced demand for physical gold across most Asian markets this week, as Indian dealers offered the steepest discounts in over six months. In India, domestic gold prices reached an all-time high of ₹80,034 ($927.69) per 10 grams last weekend.

The surge was driven by international spot gold prices, which hovered near a record high of $2,790.15, last seen on October 31. Indian dealers this week offered a discount of up to $38 an ounce over official domestic prices – inclusive of 6% import and 3% sales levies, up from last week’s discount of $30 an ounce.

Jewellers were not making purchases as some are speculating that the government might change the import duty structure in the next week’s annual budget, said a Mumbai-based dealer with a private bullion importing bank.

Finance Minister Nirmala Sitharaman will present the next fiscal year’s federal budget on Feb. 1, following a significant import tax cut on gold in the previous budget.

In top consumer China, dealers offered discounts of $10 and charged a premium of $10 per ounce above international rates, versus premiums of $3-$13 last week. Chinese gold prices are higher again and close to historical highs, which has sucked out demand but some people are still buying due to the holiday season starting next week, said a mainland China-based precious metal trader.

In Hong Kong, gold was sold at par with a $2 premium. In Japan, bullion was sold from a discount of $1 to a premium of $1.